Well, it can be good for guys like you and me, who are really looking into competing (I'm assuming you are). But not everyone wants the whole dog-eat-dog, natural selection, alpha male dominance attitude that comes with competing. Some people just want to learn MMA, and that's fine. Not everyone has to be an athlete.
Look at Team Quest. Equally good gym, and it gets praised for having such a great attitude. Everyone's mind is open to new things, and everyone leaves in a good mood. No breaking needed.
Hughes is a great fighter but since I saw him on TUF2 I really started disliking him. There was a senior on our high school wrestling team last year who was just like that. He would just try to mentally destroy people on his own team. I remember the night before Christmas eve (I was a sophomore), we were having kind of a light-hearted practice, and we were finishing up by doing some live wrestling with the varsity team. He stands up, headbutts me, and when I'm like "Whoah, hey, watch the headbutt," he starts just going all out. Then he screams "COME ON, YOU GONNA BE A PUSSY ABOUT IT?" I wasn't hurt but it was just like, I was confused, why he was being such a dick. As I'm walking away when we go to get new partners he says "That's all you ever were." I wasn't about to punch him because he was a captain, but I got so pissed I just punched the shit out of a locker. Afterwards he came up to me, and I just shot him a look like "I want to fucking kill you." And he says "You'll thank me someday." He thought he was helping me out by toughening me up, but all it did in the end was put me in a piss-ass mood and to this day I still seriously dislike the kid. I met up with him again at an open mat session, and he started headbutting me again to try to pin me, and I was about 2 seconds from turning around, putting him in guard, and slapping on a triangle choke until he passed out and shit his pants.
There's nothing helpful about trying to mentally break people down. You may think it produces tougher guys but I completely disagree. While you shouldn't baby people, there's nothing wrong with encouragement and not being a complete asshole. All breaking people down does is exactly what it says: breaks them down. They'll doubt themselves mentally every time they try to do something. You may think it causes the tougher guys to rise to the top, but some of the people who are really affected by you breaking them down, may have been able to beat the "tough" guys, if they didn't hit that mental block that you put there.
Kind of went off topic, but it's just something I see that pisses me off. It's like helping other people out instantly labels you as a pussy.